Small Business Overview

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Questions and Answers

What is primarily covered under retailing activities?

Construction of commercial buildings

Sale of goods and services to final consumers (correct)

Manufacturing goods for other businesses

Providing raw materials to large firms

How do small businesses support economic opportunities for entrepreneurs?

By offering non-competitive employment

By focusing solely on large-scale manufacturing

By allowing individuals to start their own operations (correct)

By providing capital investments for large enterprises

Which of the following is NOT considered a role of small businesses in the economy?

Supplying products and services needed by other businesses

Competing directly with large businesses in all sectors (correct)

Distributing products for other businesses

Providing employment for the labor force

What is one significant advantage of operating a small business compared to being an employee?

Flexibility to create own work schedule Signup and view all the answers

Small businesses often fulfill the role of suppliers for which type of business need?

Filling gaps in the distribution chains of manufacturers Signup and view all the answers

What is a characteristic of general construction firms?

They engage in construction projects for private and government entities. Signup and view all the answers

Which factor significantly influences an employee's pay in traditional employment?

Industry standards and company's financial capacity Signup and view all the answers

Which of the following statements accurately describes small businesses?

They cater to specific market niches unfeasible for larger businesses. Signup and view all the answers

What is one advantage that a small business operator has over a plain employee?

Ability to dissolve the business if unsatisfactory Signup and view all the answers

Which of the following represents a potential disadvantage of operating a small business?

Income uncertainty Signup and view all the answers

How can a small business operator potentially increase their profits?

By exerting more effort into their business Signup and view all the answers

What responsibility does a small business operator have that may not be present for an employee?

Making all decisions and facing their outcomes Signup and view all the answers

Which of the following is NOT a benefit of being a small business operator?

Possibility to encounter undesirable customers Signup and view all the answers

What is one major risk associated with small business ownership?

Risk of losing entire capital investment Signup and view all the answers

Which factor may lead to a poor quality of life for a small business operator?

Long working hours and demanding conditions Signup and view all the answers

What is a challenge that small business operators may face regarding customers?

The necessity to serve all customers, including the undesirable ones Signup and view all the answers

Which definition accurately describes a small business according to the market share approach?

A business that is independently owned and does not dominate its market. Signup and view all the answers

What is the asset value range for a business to be classified as a small business according to the Total assets approach?

P1.5 million to P15 million. Signup and view all the answers

Which of the following is NOT a type of small business according to the content provided?

Retailing Signup and view all the answers

Which example falls under the category of service businesses?

A hotel providing accommodation services. Signup and view all the answers

What distinguishes a small business from a microenterprise based on asset value?

A small business has total assets between P1.5 million to P15 million. Signup and view all the answers

Repair services fall under which category of small business?

Service Signup and view all the answers

Which of the following is an example of a manufacturing business?

A company assembling bicycles. Signup and view all the answers

What is the primary reason the government prefers the total assets approach to define small businesses?

It simplifies the formulation and implementation of policy. Signup and view all the answers

Study Notes

The Nature of Small Business

A small business can be defined using two main approaches: market share and total assets.
Market Share Approach: A small business is independently owned and operated, and not dominant in its field. Ownership can be by an individual, partnership, or corporation. It does not control a significant market share.
Total Assets Approach: A small business has total assets within a specific range. For example, the Magna Carta for Small Enterprises (R.A. 6977) defines a small business as having assets between P1.5 million and P15 million. This approach simplifies policy implementation.
Businesses with assets below P1.5 million are categorized as "Microenterprises."

Types of Small Businesses

Manufacturing: These businesses convert raw materials into products for society. Examples include tricycle assembly, restaurants.
Service: These businesses provide services.
- Business Services: Examples include accounting, janitorial, security, and collection agencies.
- Personal Services: Examples include tutoring.
- Repair Services: Examples include repair shops for machinery and appliances.
- Entertaining and Recreation: Examples may include movie theaters, resorts, and entertainment venues.
- Education: Examples include schools, from Montessori to high schools and correspondence courses.
Wholesaling: Selling to retailers, merchants, or other businesses, not directly to final consumers. Examples include soft drink wholesalers and suppliers of office equipment.
Retailing: Selling goods and services directly to final consumers. Examples include drugstores, fast-food restaurants, and appliance stores.
General Construction Firms: Constructing buildings for private individuals, firms, or the government. This can include subcontracting tasks for larger projects such as electrical work and installing facilities like sewers.

Economic Importance of Small Businesses

Providers of economic opportunities for entrepreneurs: People not comfortable as employees find opportunities in small business ownership.
Providers of products and services to consumers: Small businesses often fill niches that larger businesses do not, since producing many goods or services may not be possible or economically viable for larger businesses.
Suppliers of products and services to other businesses: Small businesses often supply raw materials, semi-finished parts, labor, or finished components to larger businesses.
Distributors of products and services: Some manufacturers lack the resources to distribute products, with small businesses filling this gap.
Supporters of government: Through tax payments and other contributions.
Providers of employment: Many people find jobs in small businesses.

Advantages of Operating a Small Business

Control over destiny: Owners can choose business opportunities, dissolve businesses, and start new ones. This is not available to employees.
Reach full potential: Employees may be limited by prescribed targets and lack the flexibility to adapt to new situations, but small business owners can set and adjust their targets quickly.
Unlimited Profits: All profits accrue to the owner, not the company.
Contribution to society: Making innovative products, available to the public, and being recognized for it.

Disadvantages of Operating a Small Business

Income Uncertainty: Income is not guaranteed.
Risk of losing investment: Potential for loss of the initial capital investment.
Quality of life: High level of effort required initially.
Complete Responsibility: Owners are responsible for decisions and outcomes.
Undesirable customers: Small businesses must deal with all customers, including difficult ones.
Administrative tasks: Paperwork, and other administrative burdens.
Demanding Work: Long hours and demanding conditions.

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Description

This quiz explores the nature of small businesses, focusing on definitions by market share and total assets. It also highlights different types of small businesses such as manufacturing and service-based enterprises. Test your knowledge on the characteristics and classifications of small businesses.